Financial Analysis Report for Katrina Group Ltd. – 9M2024

Business Description

Katrina Group Ltd. operates primarily in two business segments: Food and Beverages (F&B) and Hospitality. The F&B segment specializes in multi-cuisine concepts and restaurant operations, with 23 restaurants in Singapore under 8 different brands. The Hospitality segment offers fully furnished corporate serviced apartments under the brand of ST Residences and co-living hotels under ST Signature. The company is incorporated and domiciled in Singapore, which is also its primary geographic footprint.

Market Position and Competitive Landscape

Katrina Group Ltd. is positioned within the F&B and Hospitality industries, facing competition from other multi-cuisine restaurant operators and hospitality service providers in Singapore. Key competitors include other regional restaurant chains and serviced apartment operators. The company’s market share includes a modest yet significant presence in Singapore’s restaurant and hospitality sectors.

Revenue Streams and Customer Base

The company’s revenue streams are diversified across its F&B and Hospitality segments. For the nine months ended 30 September 2024, the F&B segment generated \$29.0 million, while the Hospitality segment generated \$12.9 million. The customer base consists of local and international patrons for its restaurants and corporate clients for its serviced apartments.

Financial Statement Analysis

Income Statement

Revenue for 9M2024 decreased by 6.1% to \$41.9 million compared to \$44.6 million in 9M2023. The net profit for 9M2024 was \$2.2 million, a significant improvement from the net loss of \$0.9 million in 9M2023. The gross profit increased slightly to \$5.9 million from \$5.6 million in 9M2023.

Balance Sheet

As of 30 September 2024, the company’s total assets stood at \$36.3 million, down from \$43.5 million as of 31 December 2023. Non-current assets decreased by \$5.8 million, primarily due to a reduction in right-of-use assets and property, plant, and equipment. Current liabilities decreased by \$3.7 million, resulting in a negative working capital position of \$20.5 million.

Cash Flow Statement

The net cash generated from operating activities was \$14.0 million, primarily driven by operating cash flows before changes in working capital. Net cash generated from investing activities amounted to \$0.9 million, largely due to proceeds from the disposal of an investment property. Net cash used in financing activities was \$14.6 million, primarily due to lease payments and loan repayments.

Key Findings

Strengths:

• Significant net profit growth to \$2.2 million in 9M2024 from a net loss of \$0.9 million in 9M2023.
• Decrease in current liabilities, improving the liquidity position.
• Strategic disposal of non-core assets, generating additional cash flow.

Risks:

• Continued negative working capital position, indicating potential liquidity issues.
• Decreased revenue across both business segments due to increased competition and reduced number of outlets.
• Dependence on government grants and rebates to boost other income.

Report Date and Period

This report covers the financial performance of Katrina Group Ltd. for the nine months ended 30 September 2024.

Strategic Actions

The company is focusing on portfolio rejuvenation and business consolidation in the F&B segment, including channeling resources to new or better-performing outlets and closing non-performing ones. In the Hospitality segment, the company is leveraging the strong recovery in Singapore’s tourism sector.

Investment Recommendations

If Currently Holding the Stock

Investors holding Katrina Group Ltd. stocks should consider retaining their position due to the company’s significant net profit growth and strategic actions aimed at improving profitability. However, they should monitor the company’s liquidity position closely.

If Not Currently Holding the Stock

Potential investors should approach with caution. While the company has shown a significant turnaround in profitability, the negative working capital position poses a risk. Consider investing if the company continues to improve its liquidity and demonstrates sustained revenue growth.

Disclaimer: The recommendations provided are based on the financial data available as of the report date. Investors should conduct their own due diligence or consult a financial advisor before making investment decisions.